Sometimes, the cure is worse than the disease. Especially when
it's the government that's doling out the medicine. This is what happened when
Washington attempted to improve the way its security agencies vetted hundreds
of thousands of workers needed suddenly after the 9/11 attacks to pursue
counterterror tasks and oversee heightened secrecy requirements.
Soon after its hiring binge began, the government's ambitions
collided with a creaky system for conducting the background checks needed to
approve job applicants for security clearances. By 2004, the backlog of
contractors awaiting approval had reached the size of a small city: at least
188,000. Complaints by federal agencies and job-seekers alike grew so
intense that policymakers and legislators in Washington became
fixated on finding a solution.
Some additional personnel were added to the review process, but
Washington largely chose a different path that promised to be cheaper and
quicker -- shortening the time allowed for the reviews, by law. In its wisdom,
Congress passed the 2004 Intelligence Reform and Terrorism Prevention Act, which
required that by 2009, agencies must process 90 percent of clearance
applications within an average of 60 days -- less than a sixth of the average
375-day wait in 2003.
The government also chose to farm the bulk of its vetting work out
to contractors, which generally are more nimble than federal agencies in
growing or shrinking and are practiced at luring federal funds by promising to
cut costs. It relied in particular on U.S. Investigations Services (USIS), a
firm that in 1996 was calved off an independent agency known as the Office
of Personnel Management (OPM) and quickly got most of the background investigation
business before being snapped up by a private equity investment firm in 2003.
Nearly a decade later, the entire clearance system has been
convulsed by two particularly notorious security checks by USIS. The first led
to a renewed clearance of National Security Agency contractor Edward Snowden, the
leaker of tens of thousands of highly sensitive classified documents. The other
gave access to Navy Yard contractor Aaron Alexis, whose shooting spree there on
Sept. 16 killed 12 other people.
It's clear, however, that the problems are much more widespread
and that their repair will involve somehow fixing an investigative culture -- created
by Congress and contractors, as well as the executive branch -- that heedlessly
prized speed over quality.
USIS, which is based in Falls Church, Va., but owned by the Rhode
Island-based investment company Providence Equity Partners, is the target of a
criminal investigation on charges unrelated to those clearances, according to a
statement by Sen. Claire McCaskill (D-Mo.) at a June 20 congressional hearing. It
stands accused, she said, of "systemic failure to adequately conduct
investigations under its contract."
Michelle Schmitz, OPM's assistant inspector general for investigations, said at the June hearing that it began to investigate USIS in
late 2011 on a "complicated contract fraud case." A federal grand jury launched
a criminal probe and issued subpoenas to former USIS executives this summer,
the Wall Street Journal first reported.
A spokesman for USIS, Ray Howell, declined to comment on the
allegations. But several former employees said in interviews that OPM's contract
with the firm -- which OPM so far has refused to make public -- was structured
to place a premium on speed. They said the firm's income depended on how many
cases it processed and that it incurred financial penalties for failing to
But responsibility for any clearance investigation mistakes would
hardly be USIS's alone.
Sen. Rob Portman (R-Ohio), a former White House aide who is now the ranking
member on a subcommittee devoted to increasing the efficiency of federal
programs, said at a June 20 congressional hearing that while problems persist
in the clearance process, "most troubling, I think, is the pressure to meet
timeliness metrics impacting the quality of investigations."
Some of this history is likely to be aired at a hearing -- postponed
temporarily due to the government shutdown -- by the Senate Homeland
Security and Governmental Affairs Committee, at which top officials from OPM,
the Office of Management and Budget, the Office of the Director of National
Intelligence, and the Defense Department are slated to testify. OPM has
overseen all clearance investigations for defense personnel since 2005, giving
it a huge workload.
This summer, Sen. Jon Tester (D-Mont.), a committee member,
introduced the Security Clearance Oversight and Reform Enhancement
Act, which, among various reforms, would require OPM to fire or debar
any employee or contractor who falsifies or fails to review background
investigation reports. Since 2007, 20 employees have been convicted of such
crimes, and one more pleaded guilty, according to OPM, but the agency's inspector general, Patrick McFarland, said at the June hearing that he does not "believe
that we have caught it all by any stretch."
Reforming the process is now considered urgent, not only because
of the Snowden and Alexis debacles, but also because the government is
struggling to monitor the 4.9 million people who hold clearances, an increase
of roughly 1.7 million people since 1993. Even as the United States winds down its wars
overseas, the number of people with access to classified information has stayed
steady. The government is still in the process of drafting uniform standards to
determine whether positions require a clearance, opening the possibility that
many individuals hold clearances who don't need them.
"Everyone with clearances has to undergo a periodic
reinvestigation. The more in the system means the workload multiplies, becomes
more expensive, and creates the possibility of flawed investigations," said
Steven Aftergood, who studies security classification issues for the Federation
of American Scientists, a nonprofit research and advocacy group in Washington.
Clearing the backlog
Although the problems are seen as acute now, they have deep roots.
Even before the 9/11 terrorist attacks, the Department of Defense was
experiencing backlogs in clearance investigations, largely caused by inadequate
resources and changing government standards. But after 9/11, "the intelligence
budget doubled in size," Aftergood said. "To spend the money, the government
needed more cleared people, including more cleared contractors."
Brenda Farrell, director of defense capabilities and management at
the Government Accountability Office, which has published many reports on
clearance problems over the past decade, said "the contractor workforce was
waiting, in some cases, more than a year for a clearance. You had a situation
where you had people waiting to work, but they couldn't work. And the backlog
Bill Henderson, president of the Federal Clearance Assistance
Service who until 2007 worked as a field agent and supervisor in DOD and OPM
investigations, noted that contractors began to adapt in troublesome ways -
they overstated how many employees they needed in an attempt to stock up on
cleared employees, knowing it could take more than year to get clearances.
Tom Davis, former Virginia congressman who chaired the House committee that helped write the new clearance deadlines for federal security agencies, recalled that because of the backlog, defense contractors were paying a premium for cleared workers, which boosted government contract costs. "You had to do something," Davis said, whose district was the home for many contracting firms. Government agencies "didn't have their act together. I think everybody was frustrated," he added.
The bill his committee put forward imposed the deadlines in
stages. By 2007, agencies had to make a decision on 80 percent of
applicants within 120 days, but two years later, it had to grant 90 percent of
clearance cases within an average of 60 days-40 days for the background
investigation and 20 days for agencies to make their decision. The act did not
put deadlines in place for periodic rechecks of clearances, like the one USIS
conducted on Snowden in 2011, but agencies pushed their reviewers to speed up
those cases as well.
The workforce assigned to the clearance task expanded somewhat,
growing from 7,819 in March 2005 to 9,421 in January 2008, according to a 2008
report by the Security Clearance Oversight Group, which includes officials from
OPM and OMB. Most of these investigators worked for USIS and a few other
private firms, rather than OPM.
It looked to many in Washington like a great success -- a problem
solved. By 2012, the backlog had disappeared and the average initial
investigation was completed within 36 days. "We have no backlogs, are meeting
timeliness mandates, and have increased automation," Merton Miller, associate
director of OPM's investigations unit, said at the June congressional hearing.
But the obsession with cranking out cases had some negative consequences.
According to a May 2009 GAO report, an estimated 87 percent of the 3,500
background reports DOD officials used to make security clearance decisions were
incomplete. Miller said this was largely due to the difficulty of interviewing
military service members deployed in war zones. The law's 40-day investigative
deadline "must be met" nonetheless, he said, so all probes "must be
accomplished within that period of time, and then the case is closed."
OPM gauged whether investigators were performing adequately partly
based on the speed of their work, and partly by how often the agencies sent
reports back for additional work to fill in missing information. Miller said
the agencies sent less than 1 percent of all the cases that OPM oversaw back to
But the reason the figure was so low, Farrell said, is that many
agencies were afraid of missing the deadline Congress had set. "You send it
back, there goes another week, two weeks, and everybody was focused on this 60-day goal," Farrell said. "Often the adjudicators, we were told, would just go
ahead and complete the investigation themselves. Or [they would] think it
wasn't important enough...and skip over it."
GAO recommended in 2009 that the OPM investigations unit measure
how often the background checks met federal standards, so they could figure out
how to fix the problem of incomplete investigations. But OPM, as of August, had
not implemented that recommendation. "They do not have a systematic way to help
ensure the investigations are complete," Farrell said. "That's what's missing."
Congress and government agencies were not alone in pressing for
faster clearance checks.
The managers at USIS, which was formed by privatizing a unit
within OPM in the mid-1990s and instantly became one of the country's largest
security firms, became increasingly devoted to profits as the firm was shuttled
from one private owner to another over the years, according to its former
That concern was first articulated in 1995 at a congressional
hearing on the agency's transformation by Rep. Jim Moran (D-VA), whose Northern
Virginia district included many rattled OPM employees. "I just hope we don't
find ourselves in a situation where we become dependent upon firms that don't
have the commitment that federal employees have to getting the job done, really
whose principal objective is making profit," he said at the time.
The shift to private sector control eventually proved to be a
financial boon for many who had been at OPM, however, particularly those with
the highest salaries. Employees accrued shares in the new company based on how
much they were paid every year by OPM, and some reaped substantial benefits when a private
equity giant, the Carlyle Group -- known for its investments in the defense
industry -- bought a quarter of the company in 1999.
They reaped additional sums when private equity firm Welsh Carson
Anderson and Stowe, which focuses on investments in the healthcare and business and information
services industries, agreed to pay $545 million for a majority stake in the
company in 2003. News reports at the time stated that $500 million was
distributed among 4,000 current and former employees and the other $45 million
went to buy outside shareholders. Carlyle and senior USIS managers reinvested
another $172 million in the company, according to the firms.
"There were some who got in the millions of dollars, and some who
got in the thousands or hundreds of thousands," said Mike Clancey, an OPM
investigations manager who moved over to USIS as head of quality control in
1996 and later the security policy division until 2007. "I doubt there were any
two checks the same."
In the years following the company's formation, OPM and USIS
officials trumpeted the privatization as a great success. Philip Harper, USIS's
first CEO, said in April 1997 that the company was doing 40 percent more work
with 10 percent fewer employees. In its application for a Harvard University
Innovations in American Government Award, OPM officials boasted that by 1999,
the effort already saved taxpayers $65 million. Harvard
named OPM a 2000 finalist for the effort.
Authoritative, long-term evidence of cost savings is more elusive,
however. OPM, its inspector general, and the GAO have never conducted follow-up
studies assessing long-term financial benefits from the privatization, their
Moreover, the company's takeover by private investors in 2003 had
significant consequences for its work, according to former USIS employees. They
said its culture became more corporate and numbers-based, a development that
some said had brought a needed discipline while others decried as undermining
Phil Gasiewicz, who headed USIS operations from 1996 to 2004, said
for example, that after the buyout in 2003, he sensed that the company's new
private equity owners wanted to flip it to a new buyer. The firm had little
experience in the industry, he said in an interview with CPI. As the
company scrambled to hire and train new, often less-experienced, investigators
to help with the rapid increase in clearance cases, some of its original
employees began to exit, buyout checks in hand, to retire or go back to working
for the federal government, he and other former employees said.
"You could imagine that these (new owners) were very much nervous
nellies about owning us," Gasiewicz said. "When I would go to board meetings
and give presentations on how long it would take to train an investigator or a
reviewer, oh they didn't want to hear that. What they wanted to hear was: Can
we produce more cases?" He said the pressures came from the government as well
as the company.
Another former senior USIS manager, who retired in 2008 and asked
not to be named, recalled the motto in USIS's original employee handbook: "Do
the right thing the right way." After the private equity firm's takeover, he
saw an emphasis on streamlining the investigations process and "losing concern
of what's the quality of the investigation....As time went on, the pressures got
greater to produce, that underlying philosophy got thrown to the side," he
Clancey said financial pressures were a reality from the
beginning. But at the time of the 2003 buyout, he saw the push to cut costs and
drive revenue increase. The company's new executive team "focused more on
productivity, cutting down time, how do we get through review faster. Some
might say cutting corners. You could argue that," he said. Clancey, who said he
never saw the company violate contract requirements while he was there, left
the company in the spring of 2007 after the company stopped funding his
The company's listed public contacts, including its head of
investor relations Fran Higgins and its general partner and chief
financial officer Jonathan M. Rather, did not respond to telephoned and
emailed requests for comment.
Later in 2007, USIS was sold to another private equity firm,
Providence Equity Partners, and by the accounts of other former employees, the
company's pressure for profits intensified. One, who worked on quality control
issues but asked not to be named, said that roughly a year after the sale,
senior managers started pressuring certain employees to work so quickly that
they had to skip reviews required under their contract with OPM, which were
meant to ensure that the investigations were complete.
"They were knowingly not doing their job," the former employee
said. "They skipped the review and hoped OPM didn't look at them." The former
employee said USIS feared losing money if it missed its government-set
deadline. Employees would be particularly pressed to close cases before the end
of every quarter, so the company could get paid and report higher revenues, the
employee said. The managers called it "flushing" the background check reports,
Two spokesmen for Providence Equity Partners did not respond to
emailed and telephoned requests for comment on these specific allegations.
Other media have quoted unnamed former employees describing the same "flushing"
practice, and the New York Times on Sept. 27 reported that the company had
dismissed some top executives after a federal investigation into the practice
Gasiewicz pointed out, however, that USIS wouldn't be solely
responsible for any shortcuts. OPM is supposed to review investigation reports
before sending them on to government agencies, which review them a second time
before deciding whether to grant a clearance. OPM collects fees from other
federal agencies for its security investigations oversight work, he pointed
"How can they possibly allege [now] that for 3-4 years USIS was
turning in improper background investigations and they didn't catch it?"
Gasiewicz said. OPM declined comment on its review process.
This push for speed and volumes at all costs made an inherently
difficult job almost unbearable, according to some investigators.
Tom Wilson, a retired fire chief and police officer in California
who worked as a USIS investigator from 2010 to 2012, said the pressure to make
money outweighed the company's efforts to conduct complete, accurate
In a phone interview with CPI, Wilson said USIS supervisors wanted
investigators to churn out background checks quickly. Wilson said for example
that he typically worked on 15 to 20 investigations at once, of varying
complexity. He was expected to complete each one in five to 10 days, and
reprimanded if he tried to go beyond minimum government standards for
background checks, Wilson said.
"That's when the pressure came in. They kept giving them to me and
giving them to me," he said. "When you throw a profit motive in there, it
deteriorates into a mill. Get them out, get them out," he said.
It got to the point where he felt he only had two options: Work
overtime without compensation or cut corners. Wilson chose to work long hours,
clocking in an average of 60 hours a week, but quickly felt burned out and
began complaining to his superiors. He was fired by email on May 30, 2012,
without being given a reason, he said.
Wilson is the lead plaintiff in a proposed class action lawsuit
filed in 2012 alleging, among other things, that the company didn't pay him
overtime hours and retaliated against him for his concerns about work
conditions. In a court pleading, the company denied any wrongdoing and said
Wilson was not entitled to any relief.
Another former USIS employee, who worked as a team leader from
2001 to 2011, described the work environment as "hectic" and said upper
management had "expectations very few people could meet." He said USIS would
take on government workloads that were "nearly impossible" to do.
"Expectations were high but you didn't fear losing your job if you
didn't meet all the deadlines. ... I tended to protect my people from upper
management, but that became more difficult," he said. "They just wanted us to
stay on their butts and fire them if they couldn't (meet deadlines)."
Another USIS veteran, who was at the company for more than seven
years and is also a participant in the proposed class action lawsuit, said the
workplace became particularly tumultuous after Providence Equity Partners took
over the company.
The investigator, who said she was fired last month for allegedly
not meeting deadlines, said she was reprimanded for going beyond the minimum
requirements for background checks. "I now have high blood pressure; I have to
take medication," the investigator said. "I wouldn't recommend it to my worst
Even when she had difficulty tracking down military service
members for interviews, she said, the company refused to change the cases' due
dates. She recalled one month when she received more than 100 case assignments,
which she described as 6 months-worth of work. "All they look at are those
numbers," the employee said, on condition she not be named. "That's all they
USIS, which vetted Snowden and Alexis, said in a statement
released at the June congressional hearing that OPM had informed the company
its investigation met all standards, and that the government did not request
for additional information or interviews.
On September 23, however, Navy officials revealed that USIS's 2007
clearance check on Alexis, a contractor with an arrest record and history of
mental illness, downplayed his prior arrest for alleged malicious mischief.
According to a Seattle Police Department arrest report, Alexis aimed his .45 caliber pistol
at a construction worker's car and shot out the rear tires in a "black-out"
rage. But USIS's background check summary stated only that he "deflated the
tires on a construction worker's vehicle."
OPM's Miller said in a written statement to CPI on Sept. 19 that
the check met all investigative standards.